Jamie Dimon is in the middle of a lovefest. In a conference room on the second floor of JPMorgan Chase’s (JPM) Manhattan headquarters on May 10, the chairman and chief executive officer is fielding questions, town hall-style, from an audience of 300 of the bank’s administrative assistants. Nine hundred more are listening in by phone. One woman pipes up to ask: Would you ever go on the reality show Undercover Boss? “I would if I thought it would make us a better company,” Dimon says. Another wants to know: What do you look for in your leadership team? “Capability, character, and how they treat people,” he replies in his choppy, outer-borough accent. “Leaders can’t just happen to be good at something.” A third woman takes the floor. How do you stay focused on your job in the face of the negative attention the company’s received lately?
It’s a good question. On May 21, Dimon, 57, faces a shareholder vote on whether he should be allowed to remain the bank’s chairman after a year of federal investigations into whether it manipulated energy markets, inadequately guarded against money laundering, abused homeowners in foreclosure, facilitated Bernard Madoff’s Ponzi scheme, and misled the public about the “London Whale” fiasco, the worst trading loss in JPMorgan’s history. Dimon’s reply is unequivocal. “I’m like you,” he says, according to a colleague at the meeting. “I am so darn proud of this company.” The assembly bursts into applause.
Running the largest bank in the U.S. as it makes more money than ever surely helps Dimon cope. JPMorgan earned $21.3 billion last year—a record profit that the CEO’s allies say dismisses much, if not all, of the argument that he’s unfit to continue serving as both chairman and CEO. “The results speak for themselves—enough said,” says John Kessler, a JPMorgan board member until 2007. “I think he’s unapologetic, with the exception of the Whale trade,” says John Mack, Morgan Stanley’s (MS) CEO until the end of 2009. “If I had those numbers, I don’t know if I’d be apologetic either.” Two dozen of Dimon’s peers and colleagues echoed the sentiment in interviews.
The notion that profit conquers everything may be the oldest idea in capitalism, but its recent resurgence may say something about how and whether the financial system has changed since the crisis of 2008. Banks have resumed some of the practices that precipitated the meltdown, from wagering billions on credit derivatives to hiking bonuses.
Dimon declined to comment, but according to people who know him, he bristles at the suggestion that the bank’s bottom line matters above all, knowing that such a callous formulation would only anger regulators. More personally, the idea dirties his view of what banking, and his legacy, ought to be. Dimon is not just the biggest banker in America, overseeing $2.4 trillion in assets and 256,000 employees, more than the population of Orlando. He’s supposed to be the noblest, too, the one CEO who kept his bank secure and profitable through the crisis and who defended the industry’s honor during the populist outrage that followed.
Dimon’s stature and the variety and magnitude of problems facing the bank have elevated an otherwise routine corporate governance issue to the level of career referendum. “The vote and the debate right now about splitting the CEO and chairman have nothing to do with splitting the CEO and chairman,” says William Daley, JPMorgan’s Midwest chairman until 2011 and a former chief of staff to President Barack Obama. Instead, it’s as much about Dimon’s outsize persona as his performance. “In an unfortunate way, but that’s the way life is, it is all coming down to this vote around the guy who has been at the forefront of being a successful banker, running a bank that’s still making money and somebody who speaks his mind,” Daley says.
Others become more exasperated, finding the heat on Dimon silly or toxic or both. “They’re jealous,” former Bear Stearns CEO Jimmy Cayne says about Dimon’s critics, in a rare interview since JPMorgan bought the foundering investment bank in March 2008. “They’re looking at themselves as being unfortunate and being underpaid and being underappreciated, and if there’s a piñata out there to take a swipe at, who better than somebody who’s got everything that they don’t?”
In the years after the crisis, Wall Street cheered Dimon on as guardian of the profession’s honor and buster of regulators’ chops. In 2011 he popped up at a speech by Federal Reserve Chairman Ben Bernanke to suggest regulations were stifling job growth. “Has anyone bothered to study the cumulative effect of all these things?” he asked from the audience. “Is this holding us back?”
JPMorgan eclipsed Bank of America (BAC) in the fall of 2011 to become the largest bank by assets. “We had record profits this year,” Dimon boasted to a roomful of analysts in February 2012. “We had record profits last year. I’ll be damned if we don’t have record profits at least in the next year or two or for a while now.” He upbraided the journalists in attendance for writing about banker pay when media outlets put a lot of revenue toward salaries, too. “You don’t even make any money,” he told them. “We make a lot of money.”
As he uttered the words, JPMorgan was in the process of losing a lot of money. The specific way it was lost—with risk piled on in a unit Dimon had personally encouraged to take more chances—was about to wreck his reputation as the most prudent, hands-on CEO in banking. In a London department whose ostensible purpose was to manage the bank’s risk, traders had instead built up a position in credit derivatives so large, and so difficult to unwind, that one of the traders became known as the London Whale.
The felicitous nickname, the reappearance of crisis-era gremlins, and five ill-advised words—Dimon dismissed the matter as a “complete tempest in a teapot”—combined to enrage the public and Congress. (He later said the remark was “stupid.”) Dimon was called to testify twice about how he, of all CEOs, had let a bank lose billions on derivatives. The subtext was clear: If Jamie Dimon can’t run a bank without stuff blowing up, can anyone? As the Whale losses accumulated throughout 2012, eventually reaching $6.2 billion, federal investigators piled on.
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